Journal of Commerce -- "The Drewry Container Benchmark began tracking the average spot market freight rate from Hong Kong to Los Angeles in late December 2005 and hit its rock bottom at $871 per FEU (forty-foot equivalent units) from July 6 through Aug. 3, 2009. In contrast, a record high of $2,838 per FEU was recorded on Aug. 2 this year (see chart above). The Aug. 16 rate dropped $87 from the week before to $2,737 per FEU in only the second weekly rate decline since March 15.
MP: Compared to shipping rates last summer and fall of about $1,200 per FEU between Hong Kong and L.A., shipping costs have more than doubled to the record high of $2,838 in earlyAugust, before falling slightly to $2,737 last week. Scott Grannis reported today that the Harpex Shipping Index (based on rates charged by container ships in the North Atlantic) has experienced a very similar increase over the last year (rates have more than doubled). Given the ongoing boom in global shipping and the related rising rates (along with improvements in other economic indicators), there's nothing to suggest a slowdown in the global economic recovery, and certainly nothing to suggest a double-dip recession, as Scott points out.
In its annual Labor Day outlook, global outplacement consultancy Challenger, Gray & Christmas reports that the U.S. job market is well on the road to recovery and is actually rebounding sooner and faster compared to the jobless recoveries that followed the previous two recessions (1990-1991 and 2001). Here are some highlights:
1. At this point in the previous two recoveries – following the 1990-1991 and 2001 recessions – the job market was actually getting worse. Many people are so caught up looking at the weekly and monthly numbers, that they fail to look at the bigger trends, which indicate just how much the job market has improved over the last 12 months. The statistics indicate that the job market has made great strides over the last 12 months and appears to be rebounding sooner compared to the previous two recessions.
2. Monthly job cuts have numbered fewer than 100,000 for 14 consecutive months, a streak that has not been achieved since 1999-2000. The current 12-month moving average, which stands at 52,778 as of the end of July, is already well below the lowest annual average achieved during the last period of economic expansion, when the moving average bottomed out around 64,000 (see chart above).
3. Job losses due to the recession turned to gains as of January 2010, with payrolls experiencing five consecutive months of net growth that saw more than one million new jobs added to the economy. The gains slowed in June and July as the government shed tens of thousands of temporary Census workers, resulting in overall total non-farm job losses of 352,000 over the two-month period. Despite those losses, payrolls have still seen net growth totaling 654,000 jobs so far this year, due in large part to steady job gains in the private sector. The private sector has had seven consecutive months of job gains, adding a net total of 630,000 new jobs to the economy since January 1. While the payroll gains remain weak, they are occurring much sooner when compared to the 2001 recession, when it took 21 months before the economy began to add jobs on a consistent basis.
4. While the unemployment rate remains historically high and the decline is not occurring fast enough for most, it definitely appears to be heading in the right direction. If the economy were following the same pattern as the early 1990s recession or the 2001 recession, we would be facing another three to six months of rising unemployment.
5. When you look at any of the employment statistics on a month-to-month or week-to-week basis, there are going to be ups and downs; particularly at this stage of the recovery. However, when you look at the overall trend since June 2009, everything is headed in a positive direction.
6. Hiring will accelerate in the coming months, but not before employers maximize the productivity of their existing workers by adding new technology and increasing hours. In the meantime, the job market will remain fiercely competitive as the recently unemployed square off against the long-term unemployed as well as with job seekers re-entering the labor pool after abandoning it out of frustration. Job seekers should view Labor Day as the beginning of the workplace New Year and make a resolution to abandon all passive job-search strategies for ones that are far more aggressive.
Journal of Commerce -- "Container ship charter rates are still climbing through the summer as ocean carriers compete for increasingly scarce tonnage to keep pace with surging cargo volume on key routes from Asia to North America and Europe. Charter rates for ships that can carry 3,500 20-foot containers have more than tripled since the beginning of the year and are set to climb further as unexpectedly strong cargo demand is outstripping the supply of ships for hire and newly built vessels entering the market.
The broadly based rally has driven up the Association's ConTex index, which covers six ship sizes from 1,100 TEUs to 4,250 TEUs, to 583 from 532 at the end of June and 275 at the beginning of March. Ocean carriers' pursuit of chartered tonnage is driven by robust cargo growth on the export trades out of Asia to Europe and North America where most ships are sailing fully loaded with boxes.
Cargo volume on the Far East-U.S. trades grew 25.7 percent during the first three months of the new trans-Pacific contract season from May to July based on preliminary customs figures. Weekly capacity deployed on Far East-U.S. trades is already back to 2008 levels and is 12 percent above 2009 levels.
Container ship prices also are surging as carriers and charter ship-owners place orders for new ships and step up purchases of second hand tonnage."
The top chart shows that the U.S. had the most energy-efficient economy in history last year (data here), based on the amount of energy consumed to produce each real dollar of Gross Domestic Product (GDP). In 2009, it required only 7,290 BTUs of energy (petroleum, natural gas and other energy) to produce each real dollar of GDP, an all-time record low, and less than half the energy required in the mid-1970s to produce a dollar of output.
Just one example of many that contribute to the remarkable increases in energy efficiency over time is illustrated in the next graph showing energy consumption trends for household appliances from 1990 to 2009 (data purchased from the Association of Home Appliance Manufacturers). Since 1990, the energy consumption per unit for five of the most common household appliances has fallen so consistently over the last twenty years that today's household appliances use between 20% (air conditioner) and 73% less energy (clothes washer) than in 1990.
Using a slightly different measure of energy efficiency provided by the AHAM ("energy factor") that accounts for changes over time like the average tub volume of clothes washers (27% larger today than in 1990), the next graph shows the dramatic improvements in the "energy factors" since 1980 - from between a 43% improvement in energy efficiency for the room air conditioner to more than 200% for the refrigerator.
Amazingly, the EIA report also showed that total U.S. energy consumption in 2009 (94.66 quadrillion BTUs) was less than the total energy consumed 12 years ago in 1997 (94.76 quadrillion BTUs).
Update: We did save some energy in 2009 because output (GDP) fell by 2.44 percent due to the recession, but energy consumption fell by about twice as much (4.81 percent) last year, which lowered energy consumption per dollar of real GDP for the 18th consecutive year to an all-time historical record low.
"Since 1973, using the price of gold as a deflator (instead of the Consumer Price Index, which has suffered from style drift over the years) real, inflation-adjusted returns for the S&P 500 were a fabulous 15.3 percent gain in “gridlock” years, and a horrible 9.9 percent loss in years with unified government (see chart above). That’s a 25 percentage point difference.
The reason for this difference is simple: Unified governments spend far more, and more quickly, and expand regulation much more than split governments do. Programs sail through, the dollar is jeopardized, and investors seek real assets like gold to counteract the political risks of an activist government.
Based on the data, the ill effects of unified government apply to both Republican (a 7.7 percent loss) and Democrat (a loss of 11.5 percent) unified governments. The best was a split between a Republican Congress and Democratic President Clinton, which produced a whopping 32.8 percent real return.
President Reagan and a split Congress did pretty well too, with a 24.8 percent real return. Both President Reagan and Clinton did their best sustained work with a constraining Congress, or, to be more accurate, those Congresses did their best work with popular Presidents.
When it comes to split government and real returns, the right answer is “divided we stand, united we fall.”
~Eric Singer, one of the managers of the Congressional Effect Fund, the first mutual fund to explicitly seek to minimize investor exposure to potentially negative impact of new and proposed Congressional legislation on the broad stock market.
Some recent examples of the unintended consequences and inefficiencies of the $800 billion stimulus plan.
1. Canada plans to close its side of a Saskatchewan-Montana border crossing that sees just five travelers per day — even as the U.S. side is undergoing an $8.5 million stimulus-funded upgrade. Canada’s decision to close the Big Beaver Port of Entry on April 1 underscores the criticism leveled against the U.S. government spending more than $23 million in Recovery Act funding to upgrade that and four other Montana border posts. (HT: Roger Meiners)
2. Carleton Grange Pub in the Milwaukee area is closing on September 6 because of the upcoming traffic and parking disruptions that will be caused by stimulus-funded road construction near the popular English-style pub. (HT: Matt Peer)
3. Stimulus-funded solar panels in Montana will generate "cheap electricity" at a very high cost, according to economist Roger Meiners writing in the Wall Street Journal.
MP: The first problem with stimulus spending is that for the government to "stimulate" one sector of the economy with a government-subsidized project, the government has to "unstimulate" some other sectors of the economy by raising taxes, or by borrowing money that will mean higher taxes later. The second problem is illustrated by the examples above: government stimulus projects are often wasteful and inefficient and impose unintended costs on the economy.
